Although we're sitting on more processing power than ever, it seems like it actually gets less attention from developers these days.

After getting my new PC about a month ago, I decided the best thing to do was to tax it by trying out Crysis on it.  Although the graphics were good, there was this one moment that put me off it completely.  When I was driving in a jeep to go to the next checkpoint enroute to the school, I saw an enemy jeep come along.  Immediately, I ditched mine, ran off to one side, and cloaked to wait for it to pass.  When the enemy jeep approached my "roadblock", instead of stopping to get it out of the way, or even driving around it the AI driver just rammed into it like it wasn't there, and kept pushing steadily until the jeep was out of the way, then continued on its merry way.  The guys inside the jeep didn't even stop to investigate!  That moment completely killed any suspense of disbelief I had playing the game.

Later on, I was reading some forums, and came across a posting from a guy who was playing Operation Flashpoint, a PC game from eight years ago.  He told a story of the game glitching up, and failing to clear a destroyed tank carcass from the road after reloading a game.  So he gets out of the way when the Soviet tank commander drives up ahead of his column.  According to him, as he hid, he watched the commander bring his car to a stop, get out of it, and scratch his head.

In a nutshell:

Operation Flashpoint (2001): When an unexpected roadblock is placed on a road, the AI character stops, and gets out to investigate.

Crysis (2007): When an unexpected roadblock is placed on a road, the AI character treats it like it wasn't there, and keeps pushing into the obstacle until it's out of the way, and drives on.

WTF?

KZ2 begs to differ

The AI in Halo 3 campaign is great.

There is a difference between Scripted AI and full AI,Scripted AI is when in the mission a door gets locked,so that AI knows how to break it down cause its running on a script.

And OPF FTW!

I don't think AI has ever impressed me in a game except maybe in the original Half-Life where they actually tried to flank you and flush you out with grenades. This in a time where the Stroggs in Quake 2 would keep running into walls :D

I don't think any developer have ever done AI quite right (except maybe Valve). No matter what game the AI always ends up doing something stupid that breaks immersion and just makes me LOL. Or in some cases (e.g. Far Cry) the AI acts like a computer and shoots you before they've even entered view distance.

Mr. KZ2 would like to have a word with you. In his office!

Ok, I'll admit, KZ2 AI was pretty good... unless I was on a turret... then they'd take cover near explosive barrels and BURN! hehehe... I'm sure that was on purpose though. Explosions are fun :D

AI is becoming obsolete as multiplayer gaming is the future....imo.

i agree with this

l4d for example

I agree with the OP. To many companies are focusing on the best graphics. But how much of this comes at the cost of AI, Physics etc etc.

Some people have already given examples of good AI this gen. Again I'll reiterate Halo 3. It's probably one of the few games this gen that has put EVERYTHING else before graphics. They had down what they wanted from the game and made the engine to run with everything not compromised.

Eg. Halo 3 = Amazing AI ( flanking, grenade flush outs, grunts actually flee if you kick the arse out of the Brute/Elite leaders. They try and steel your vehicles. the list goes on. ) Add to that 4 player campaign, 4 player same console online multiplayer. Theatre mode ( Of which you can pause a playback go ahead in the level to where you actually are not to yet and watch some Brutes and Grunts mess around etc ) Not to mention you can have 12 buddies with you, whilst fighting 15 - 20 foot soldiers, 2 tanks, 2 ghosts, 3 banshees all at the same time. There is so much to Halo 3's engine that is there for a reason.

With the extra 2 years that Halo 3 ODST has had, hopefully they will upgrade the engine to be more efficient and give us MSAA, 720p whilst keeping the 2 framebuffers which give it the best lighting of the gen.

People judge a game engine on graphics to much, but Halo 3 is the most complete package FPS for a console yet. And thats becasue Bungie didnt compromise the balance/gameplay/features.